The U.S. Department of Commerce on Friday announced the final rule to restrict semiconductor subsidy recipients from expanding their manufacturing capacity in China. This set of national security “guardrails” of the CHIPS and Science Act prohibits the material expansion of semiconductor manufacturing capacity for advanced facilities in “foreign countries of concern” for 10 years from the date of award. The regulation defines material expansion as increasing a facility’s production capacity by “more than five percent” and also restricts the expansion of production capacity for legacy facilities beyond 10 percent.
In response to concerns from industry groups, including Samsung Electronics, the department removed the initially proposed $100,000 spending limit on investments in advanced capacity in China. Secretary of Commerce Gina Raimondo stated that the guardrails “will protect our national security and help the United States stay ahead for decades to come.”
South Korea’s Ministry of Trade, Industry and Energy expressed that they believe “normal” business activities of South Korean firms, which pose no security concerns, will be guaranteed. Industry Minister Bang Moon-kyu met with U.S. Deputy Secretary of Commerce Don Graves on Friday and asked for the concerns among domestic chipmakers to be addressed. Graves reassured that Washington “will do everything” to ensure that South Korean firms are able to continue their legitimate business.
The guardrails were first proposed in March to “ensure technology and innovation funded by the CHIPS and Science Act is not used for malign purposes by adversarial countries against the United States or its allies.”
This photo provided by Samsung Electronics Co. shows the company's chip manufacturing plant in Pyeongtaek, 65 kilometers south of Seoul. (PHOTO NOT FOR SALE) (Yonhap)
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